Facts of the Case

The petitioner, M/s Tumkur Rural and Urban Taluku MSPC (legally, Tumkur Rural and Urban Taluku MSPC Mahila Supplementary Nutrition, Production Centre), a society registered under the Karnataka Societies Registration Act, 1960, was aggrieved by an Adjudication Order dated 23.01.2025 passed under Section 74 of the CGST/KGST Act, 2017 for the period July 2017 to March 2019. The Assistant Commissioner of Central Tax passed the order ex parte, recording that the Show Cause Notice and personal-hearing intimation had been sent by speed post and registered e-mail, but the petitioner had not responded. On this basis, the demand was confirmed by classifying the petitioner's product under HSN 1901, attracting GST at 18% along with penalty and interest. The petitioner had, however, actually filed a response dated 28.04.2022 with proof of acknowledgment, and separately relied on an Advance Ruling classifying its 'Pushti Products' under HSN Code 1106, which would attract no GST if unbranded. A rectification application filed by the petitioner had also not been registered by the department.

Issues Involved

  1. Whether the Adjudication Order passed on the erroneous premise that no reply was filed by the petitioner could be sustained.
  2. Whether the classification dispute (HSN 1901 vs HSN 1106, per the Advance Ruling) required fresh consideration.

Petitioner's Arguments

  • The petitioner had in fact filed a detailed response to the Show Cause Notice dated 28.04.2022, with proof of acknowledgment, which the respondent wrongly recorded as not filed.
  • The Advance Ruling Authority had already clarified that 'Pushti Products' fall under HSN Code 1106 and, if unbranded, attract no GST — a ruling the respondent failed to consider before classifying the product under HSN 1901 and raising the demand.

Respondent's Arguments

  • The Assistant Commissioner recorded that communication for personal hearing was sent by speed post and registered e-mail, and since there was no response, the department had no option but to proceed ex parte.

Court Order / Findings

  • The Court found that the petitioner's response was, admittedly, on record and that there was an error in recording that no response had been filed.
  • This factual error required interference and restoration of the matter for fresh consideration with an opportunity of personal hearing.
  • The petition was allowed in part, quashing the Adjudication Order and restoring the proceedings before the respondent.
  • The petitioner was given liberty to withdraw its pending, unregistered rectification application in light of the order.

Important Clarification

  • An adjudicating authority cannot proceed ex parte, or treat an assessee as non-responsive, where a reply to the Show Cause Notice is actually on record with proof of acknowledgment — doing so amounts to a factual error warranting quashing of the order.
  • An Advance Ruling on the classification of a product is a relevant consideration that must be examined by the adjudicating authority before confirming a demand based on a contrary classification.

Sections Involved

  • Section 74 of the CGST/KGST Act, 2017 — determination of tax not paid or short paid by reason of fraud, wilful misstatement or suppression of facts.
  • Advance Ruling provisions, Chapter XVII of the CGST Act, 2017 — binding effect of an Authority for Advance Ruling's classification on the applicant's own goods.

Decision – In Favour of

Allowed in part, in favour of the Assessee — the Adjudication Order was quashed and the matter restored for fresh consideration after affording an opportunity of personal hearing.

Case Details

Court: High Court of Karnataka at Bengaluru
Case No.: WP No. 16936 of 2026 (T-RES)
Neutral Citation: NC: 2026:KHC:27444
Coram: Hon'ble Mr. Justice B M Shyam Prasad
Date of Order: 09.06.2026

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